Summer 2005

Letter from the Editor

Listen to the People

Reginald DaleTwo sharply conflicting reactions are emerging to the crisis that has shaken the European Union following the rejection of the proposed European constitutional treaty by French and Dutch voters and the acrimonious disagreement between Britain and France over future priorities for the EU budget.

The first is to interpret the defeat of the constitution as a serious setback to the project for European unification, as pursued by dedicated integrationists for the past half-century, to bemoan the stupidity of voters in not understanding that a more unified and efficient European Union is in their own interests, and to seek ways of getting the project back on track, perhaps with a new version of the constitution, in a few years’ time.


UK “Leader-in-Waiting” May Have Longer Wait

When Tony Blair visited Washington before the Group of Eight summit meeting at Gleneagles, Scotland, in July, his finance minister, Chancellor of the Exchequer Gordon Brown, insisted that it was his job to announce the progress Mr. Blair had made in discussions with President George W. Bush about debt relief when the prime minister returned to London.

It is Mr. Brown who has made most of the running in the heightened campaign over the past few years for debt relief and much greater aid for Africa. And it is Mr. Brown who, at least until recently, the powerful Whitehall civil service machine has assumed to be on the verge of taking over the reins of power from Mr. Blair.


The EU and Latin America Should Forge a Strategic Partnership

In a multilateral world, Europe needs partners to help shape globalization. As part of the West, Latin America is better suited than any other region, with the exception of the United States, to work closely with the European Union. In recent years, most Latin American countries have made big steps toward free-market democracy and have become more involved in tackling global challenges.

Europe, however, today pays less attention to Latin America than in the past. We look to the Islamic world because of the terrorist threat, to Africa as a result of humanitarian disasters and to growing Asian markets because of our economic interests. Latin America, by comparison, is not seen as a source either of crisis or of sufficiently pro-mising economic growth. Although a strategic partnership was established between Europe and Latin America at a summit meeting in Rio de Janeiro in 1999, the relationship has not developed much momentum.


Could Italy Be First to Leave the Euro?

The defeat of the European constitution in the French and Dutch referendums created a political crisis and provoked a slump in the value of the euro. But the most serious threat to European monetary stability is not the debate about the constitution; it is the fact that Italy has slid back into recession because of declining industrial competitiveness. There is a not insignificant risk that Italy could be compelled to withdraw from the European monetary union and the euro if it cannot revitalize its economy with higher productivity growth.

Italy struggled to reduce its budget deficit during the late 1990s in order to join the euro. But while Italy improved its public finances, it has suffered from membership of the monetary union because of declining productivity. Since joining the monetary union, Italian unit labor costs have increased by 15 percent, compared to a rise of three percent in France and a decline of five percent in Germany.


Europeans Struggle to Win Friends and Influence People in the U.S.

In cooperation with the Paris-based think tank Europe 2020, The European Institute organized a wide-ranging debate on the future of Transatlantic relations over the next ten to 15 years, together with recommendations for strengthening links between the European Union and the United States. The discussion, held in Washington on April 5, 2005, took as its starting point a controversial report, EU Foreign Political Vision 2020, based on a series of seven seminars arranged by Europe 2020 in cooperation with the Foreign Ministries of France, the Netherlands, Poland, Belgium, Portugal, Britain and Finland. The exercise, entitled GlobalEurope 2020 II, was intended to gather the views of influential Europeans on Europe’s future relations with the rest of the world and discuss the conclusions reached for each region with representatives of the regions concerned. The debate summarized below covers the section of the report dealing with the European Union and North America.